Williams Company began operations in January 2019 with two operating (selling) departments and one service (office) department. Its departmental income statements follow WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2019 Clock Mirror Combined Sales $ 160,000 $105,000 $265,000 Cost of goods sold 78,400 65,100 143,500 Gross profit 81,600 39.900 121,500 Direct expenses Sales salaries 20,000 7.800 27,800 Advertising 2,2009003.100 Store supplies used Depreciation Equipment 1,700 700 2,400 Total direct expenses 24,800 9,850 34,650 Allocated expenses Rent expense 7,090 3,600 10,690 2,500 2,300 4,800 Share of office department expenses 12,500 6,500 19.000 Total allocated expenses 22,090 12,400 34,490 46,890 22,250 69,140 Net income $ 34,710 $ 17,650 $ 52,360 Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $52,000 in sales with a 85% gross profit margin and will require the following direct expenses: sales salaries, $9,000: advertising, $900, store supplies, $1,000; and equipment depreciation, $600. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened, the new Painting department will fill one-fifth of the space presently used by the Clock department and one fourth used by the Mirror department Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space for rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the Painting department to increase total office department expenses by $8,100. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 15%. No changes for those departments' gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales. Required: Prepare departmental income statements that show the company's predicted results of operations for calendar year 2020 for the three operating (selling) departments and their combined totals. (Do not round Intermediate calculations. Round your final answers increase total office department expenses by $8,100. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 15%. No changes for those departments' gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales. Required: Prepare departmental income statements that show the company's predicted results of operations for calendar-year 2020 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2020 Clock Mirror Paintings Combined Sales + 0 Direct expenses LIITUTT Total direct expenses Allocated expenses Ter lolololo Total allocated expenses Total expenses ololo
